US Dollar Price Forecast: Strengthens as Fed Decision Nears, GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) continued its upward streak during Tuesday’s Asian session, trading near 98.70 after four consecutive gains. The strength comes amid optimism over U.S.-EU trade developments and anticipation surrounding the Federal Reserve’s policy stance.

U.S.-EU Agreement and China Talks Bolster USD

The Greenback gained traction after the U.S. and European Union concluded a trade agreement over the weekend, implementing 15% tariffs on key European goods starting August 1.

This progress alleviated concerns about prolonged disputes and reinforced a positive sentiment toward U.S. exports.

Meanwhile, attention remains on U.S.-China relations. Negotiators from both sides met for over five hours in Stockholm, with further talks scheduled. Hopes of resolution are adding to dollar demand as markets favor reduced global uncertainty.

Trump’s Tariff Warning and Southeast Asia Shift

Despite progress with Europe, President Trump warned that non-participating trade partners could face tariffs as high as 20%. He also revealed that negotiations with Cambodia and Thailand had resumed following a brief border standoff, signaling broader geopolitical shifts.

Investors now await Wednesday’s FOMC statement. While no rate change is expected, forward guidance and upcoming data, particularly the Q2 PCE inflation report and the July jobs report, will shape expectations for a potential September cut.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) has broken above a key descending trendline, currently hovering near 98.96 after reclaiming the 98.58 horizontal resistance. The sharp bullish breakout is supported by the 50-EMA and 100-EMA crossover, indicating a strong upside bias.

A sustained move above 98.96 could open the door toward the next resistances at 99.24 and 99.66. On the downside, if DXY fails to hold above 98.58, it may revisit 98.09 or 97.61.

The breakout structure aligns with strong dollar sentiment, driven by resilient U.S. economic data, and adds pressure to gold and silver markets ahead of the Fed’s policy announcement. Traders should watch for momentum confirmation on volume above 99.24.

GBP/USD Technical Analysis

GBP/USD has broken below key support at 1.3367 and an ascending trendline, confirming a bearish breakdown. The pair is now trading near 1.3323, with strong downward momentum following rejection at 1.3513 and failure to hold the 50- and 100-EMA levels.

The breach of multi-week trendline support suggests a deeper retracement could be underway, with 1.3290 and 1.3268 as immediate downside targets.

A failed retest of the 1.3367 level would further validate bearish pressure. Unless the pair closes back above 1.3447, sellers remain in control.

EUR/USD Technical Forecast

EUR/USD has broken decisively below both the ascending trendline and the 1.1585 support level, trading near 1.1549. The sharp decline follows a bearish engulfing pattern and a rejection from the 1.1706 resistance level, aligning with the strength of the U.S. dollar.

The price has sliced through the 50- and 100-day EMAs, confirming bearish momentum. If 1.1522 fails to hold, the next supports lie at 1.1452 and 1.1389. A short-term retracement may test 1.1585 or the broken trendline before resuming the downtrend.

The technical setup now favors further downside unless EUR/USD regains the 1.1645 zone with strong volume.